We have all heard about the importance of diversification in our investments. With the "great" economy that we have all been experiencing of late I have been thinking a lot about diversification of income. As a bankruptcy attorney at Halcomb Singler, LLP, a large amount of the people who I meet with have experienced some sort of job loss or layoff which is responsible for their financial difficulty. If you think about it, many people are going to need a an extended period of time to recover financially from even a minor hiccup in their income, not to mention a multi-month layoff.
I am not financial planner, but I think most people have heard how important it is to have diversity in your investments. Of course, the point behind this is to make sure that if one of your investments does very poorly that the loss will be offset by another one of your investments that does better. This makes a lot of sense to me. In fact, it makes so much sense that I am not sure why Americans and Hoosiers and not all taught of the importance of the diversification of income???
Now I realize that we are no longer in a society of people who expect to work for one employer for 40 years and to retire with a gold watch. However, in my experience, most people living in the Indianapolis area only have one job. That person may or may not plan to stay at their one job long-term....but nonetheless they only have one job. Having only one job means that if you are laid off from your one job that you have NO income.
Alright, I understand that many who are reading this are probably thinking I am nuts because there are some up sides to only having one job. Of course there are benefits. Benefits such as health, dental and vision insurance if you are lucky. There is also an argument for many people that in their field of expertise they earn much more money that they would in any other endeavor. For example, I am an attorney. An attorney is typically going to earn more than a retail sales clerk at the mall. Therefore, it would not make sense for me to work 20 hours per week as an attorney and 20 hours per week at Macy's.
So I must concede that it does not always make senses to have more than one job. However, it certainly does make sense to have more than one stream of income. I seriously cannot understand why most people pin all of their income on one source. Companies go out of business all the time and do not have the funds to pay their employees. Why not look at finding some alternative streams of income so that all of your income "eggs" are not in one basket.
To help you understand some examples of how I see that income can be diversified, let me take you through the following list:
1. Income through rent: OK. Not all of us have rental properties, but some do have space that can be rented. For example, in the Indianapolis are I believe one could easily get $400.00 per month to rent out a room in a house.
2. Income through a side business: Lets say that you are a receptionist at an accounting firm during the day. Why not think about how you can make money on the side when you are not at your "job"? This could be something that you enjoy much more than answering phones such as child care, photography, driving a limo or selling makeup or jewelry at in-home parties. Sure, you are probably not going to make as much money as at your full-time job, but if you get laid-off from your regular job you will have some income. Last time I checked no income is better than some income.
3. Income through taking advantage benefits. For example, if you are a veteran you may be eligible to receive a stipend while attending school. Why not go to school at night in an attempt to earn more at your full-time job while also receiving a stipend each month which adds to your income.
4. Speaking of veterans, why not think about joining the National Guard, Air Guard, or Army Reserves? Once the initial training period is over those serving in the National Guard and Air Guard, for example, are responsible for attending training one weekend per month and two weeks per year. AND they are paid for the time they spend training each month. Of course, there is also the chance that you will be deployed to serve overseas if you join the Guard, so this really should be done because you feel a calling to serve and not simply for financial gain. However, for the purposes of my article it is an excellent way to diversity your household's income!
5. Through Blogging. You can create a stream of income by virtue of your blog. Specifically, through allowing others to post advertising on your blog. Some bloggers make a great deal of money through blogging and see returns of hundreds or even thousands of dollars per month and every little bit of income helps to make you that much more financially secure in the event you lose a major income stream.
I would love to hear ways that you have been able to diversity your incomes! Please post your comments below!
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